Ilsung Construction (KRX:013360) shareholders notch a 30% CAGR over 5 years, yet earnings have been shrinking

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But on a lighter note, a good company can see its share price rise well over 100%. One great example is Ilsung Construction Co., Ltd. (KRX:013360) which saw its share price drive 260% higher over five years. Better yet, the share price has gained 272% in the last quarter.

Since it's been a strong week for Ilsung Construction shareholders, let's have a look at trend of the longer term fundamentals.

Check out our latest analysis for Ilsung Construction

We don't think that Ilsung Construction's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.

In the last 5 years Ilsung Construction saw its revenue grow at 13% per year. That's a pretty good long term growth rate. We'd argue this growth has been reflected in the share price which has climbed at a rate of 29% per year over in that time. It's well worth monitoring the growth trend in revenue, because if growth accelerates, that might signal an opportunity. Accelerating growth can be a sign of an inflection point - and could indicate profits lie ahead. Worth watching 100%

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

This free interactive report on Ilsung Construction's balance sheet strength is a great place to start, if you want to investigate the stock further.

What About The Total Shareholder Return (TSR)?

Investors should note that there's a difference between Ilsung Construction's total shareholder return (TSR) and its share price change, which we've covered above. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Dividends have been really beneficial for Ilsung Construction shareholders, and that cash payout contributed to why its TSR of 272%, over the last 5 years, is better than the share price return.

A Different Perspective

It's good to see that Ilsung Construction has rewarded shareholders with a total shareholder return of 196% in the last twelve months. That gain is better than the annual TSR over five years, which is 30%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Ilsung Construction (at least 2 which are a bit unpleasant) , and understanding them should be part of your investment process.

Of course Ilsung Construction may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on South Korean exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.